Will CFTA reap dividends?

IN March, 44 African nations gathered in Kigali to sign an agreement establishing a framework for the world’s largest free trade area (FTA) since the creation of the World Trade Organisation in 1995 – but how ready is Africa for such a deal? And to what extent will the Continental FTA (AfCFTA) be able to enhance intra-regional trade?
The deal aims to establish a single continental market for goods and services, allowing the free movement of businesspeople and investments across Africa. According to the UN Economic Commission for Africa, the AfCFTA has the po­tential to see trade volumes rise by 50 percent over the next five years.
Its primary purpose is to promote intra-African trade and accelerate regional integration, but po­tential spillover effects include better market access, aligned trade regimes, job creation and increased investment. Importantly, the deal could lead the way for economic diversification and structural transformation as markets shift trade away from traditional commodities and move towards de­veloping a robust and modern industrial base, boosting value added and creating new avenues for wealth generation.
Making this a reality, however, will not be an easy task, and the full benefits will take time to manifest.
Opinions about how successful the AfCFTA will be have mostly diverged between those who see it as a crucial move to fostering regional economic integration, and those who deem African markets unprepared for heightened levels of competition.
The deal certainly comes at an interesting time, as some of the world’s largest and most developed economies look to disengage from similar blocs and adopt a more protectionist stance.
But unlike those economies, Africa lacks many of the fundamentals that led to the expansion of those markets in the first place. The continent remains plagued by a number of tariff and non-tariff bar­riers, from poor infrastructure and transportation networks, to heavy bureaucracy and corruption.
As a result, trade within Africa has so far been a missed opportunity. Recent data from the African Union revealed intra-African trade accounted for a mere 16 percent of the continent’s total trade vol­umes, falling behind that of Asia and Latin Amer­ica, where regional trade accounts for 51 percent and 19 percent, respectively.
It’s worth noting that this does not mean Af­rica has performed poorly. The continent has ex­perienced significant economic expansion since the turn of the century, with sub-Saharan Africa’s economy growing from US$300 billion in 2000 to US$1.6 trillion in 2017, according to the Interna­tional Finance Corporation (IFC), driven primarily by the burgeoning tertiary sector.
As the continent’s middle- and high-income groups continue to expand, services are poised to develop further. Household spending is expected to rise in a range of areas, particularly in ICT, trans­portation, education and housing. Consequently, the IFC expects the region’s economy to exceed US$2 trillion by 2020, paving the way for new trade opportunities.
However, some doubt the success of the deal, be­cause as it currently stands, one the region’s largest economies is notably absent. While the deal was initially intended to comprise all of the continent’s nations – representing 1.2billion people and a com­bined GDP of over US$3.5 trillion – Namibia has opted to stay out of it for now